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Inequality and Network Structure

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  • Iyengar, G.
  • Kets, W.

    (Tilburg University, School of Economics and Management)

  • Sethi, R.
  • Bowles, S.

Abstract

We explore the manner in which the structure of a social network constrains the level of inequality that can be sustained among its members, based on the following considerations: (i) any distribution of value must be stable with respect to coalitional deviations, and (ii) the network structure itself determines the coalitions that may form. We show that if players can jointly deviate only if they form a clique in the network, then the degree of inequality that can be sustained depends on the cardinality of the maximum independent set. For bipartite networks, the size of the maximum independent set fully characterizes the degree of inequality that can be sustained. This result extends partially to general networks and to the case in which a group of players can deviate jointly if they are all sufficiently close to each other in the network.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Iyengar, G. & Kets, W. & Sethi, R. & Bowles, S., 2008. "Inequality and Network Structure," Other publications TiSEM c4036eb1-2637-4542-80f8-3, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:c4036eb1-2637-4542-80f8-3fc8921156f4
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    References listed on IDEAS

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    Cited by:

    1. Kets, Willemien & Iyengar, Garud & Sethi, Rajiv & Bowles, Samuel, 2011. "Inequality and network structure," Games and Economic Behavior, Elsevier, vol. 73(1), pages 215-226, September.
    2. Daniele Cassese & Paolo Pin, 2018. "Decentralized Pure Exchange Processes on Networks," Papers 1803.08836, arXiv.org, revised Mar 2022.
    3. Attila Ambrus & Arun G. Chandrasekhar & Matt Elliott, 2014. "Social Investments, Informal Risk Sharing, and Inequality," NBER Working Papers 20669, National Bureau of Economic Research, Inc.
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    7. Gräbner, Claudius & Heinrich, Torsten & Kudic, Muhamed, 2016. "Structuration processes in complex dynamic systems - an overview and reassessment," MPRA Paper 69095, University Library of Munich, Germany.
    8. Palestini, Arsen & Pignataro, Giuseppe, 2016. "A graph-based approach to inequality assessment," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 455(C), pages 65-78.
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    13. Marianna Belloc & Samuel Bowles, 2013. "The Persistence of Inferior Cultural-Institutional Conventions," American Economic Review, American Economic Association, vol. 103(3), pages 93-98, May.
    14. Qi Feng & Chengzhang Li & Mengshi Lu & J. George Shanthikumar, 2022. "Implementing Environmental and Social Responsibility Programs in Supply Networks Through Multiunit Bilateral Negotiation," Management Science, INFORMS, vol. 68(4), pages 2579-2599, April.
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    More about this item

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D30 - Microeconomics - - Distribution - - - General
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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